President's Plan to Consolidate Federal Economic Development Programs Is Long Overdue

Redundant and
duplicative programs, especially between different cabinet
departments, are a significant source of waste within the federal
government. In the case of regional economic development programs,
responsibilities-and money-are distributed among the offices and
divisions of the Departments of Housing and Urban Development
(HUD), Labor, Commerce, Agriculture, and Interior, as well as
several smaller administrative agencies, including the Small
Business Administration. President Bush's proposal to consolidate
these programs under the Department of Commerce is long overdue and
should receive the support of Congress. Consolidating
responsibility for economic development in a single department will
yield two immediate and important benefits to communities
throughout the nation: more money for needy beneficiaries and less
pork.

First, by
combining 18 of the far-flung federal community and economic
development programs into a single enterprise, millions of dollars
of savings will be realized through the elimination of 17 of the
bureaucracies that now administer these redundant programs. Their
17 program directors can be eliminated, as well as all of the
subalterns who head the 17 offices devoted to public affairs,
congressional affairs, inter-governmental affairs, research,
administration, budget, personnel, civil rights compliance, and so
on. The savings, once devoted to Washington bureaucracies, can now
be spent on cost-effective economic development projects.

Second, by
consolidating the resources and responsibility for economic and
community development within a single entity, the federal
government will be better able to coordinate assistance and to
focus on legitimate projects. Under current arrangements,
characterized by dispersed responsibilities, federal development
programs have degenerated into a grab-bag of wasteful pork-barrel
projects designed to reward influential constituencies and
Washington lobbyists-at the expense of those the programs were
initially designed to help.

For example,
consider the Community Development Block Grant (CDBG) program. It
was created in 1974 as a replacement for HUD's failed Urban
Development Action Grants to provide housing assistance to
low-income families and improve the economic environment in their
communities. In its early days, CDBG largely focused on the poor,
but in 1984, the law was changed to a formula-based distribution
that would allow it to provide funds for affluent communities with
"pockets of poverty." As the GAO noted in 2000, one of the
consequences of this change was that "Greenwich Connecticut
received five times more funding per person in poverty in 1995 than
that provided to Camden, New Jersey, even though Greenwich, with
per capita income six times greater than Camden, could more easily
afford its own community development needs."

Since that 2000
report, the CDBG has drifted even further from its basic purpose,
as a survey of recent earmarks reveals.

In the most recent
(FY 2005) House appropriations bill for HUD, committee members
included 1,032 location-specific earmarks for the Community
Development Block Grant program (CDBG), up from the 606 in the FY
2004 bill. These include such projects as the Mark Twain House and
Museum, the Lost River Cave Improvement project, the Salvador Dali
Museum, the Helen Keller Birthplace Foundation, the Finger Lakes
Open Lands Conservation project, and the B.B. King Museum. Also
included in the list is funding for dozens of university
construction projects-dormitories, libraries, and classrooms-and
several Audubon nature centers.

There is a note of
welcome hypocrisy in all this. In response to the President's
proposal to allow faith-based organizations to receive federal
funding to provide social services, some members of Congress
invoked the First Amendment and its proscription on
government-sponsored or -funded religion as a bar to the plan. But
when Congress views religious organizations as local (and voting)
constituents, such constitutional qualms quickly disappear, as the
FY 2005 CDBG earmarks reveal. Among the earmarks to religious
organizations are funds for the Sacred Heart Village (Wilmington),
Catholic Charities (New Orleans), St. Ambrose Housing (Baltimore),
Presbyterian Medical Services (Santa Fe), United Jewish
Organizations (Brooklyn, NY), United Methodist Elder Care (East
Providence), St. Anne's Children/Family Center (Spokane), St.
Francis Medical Center (Peoria), Covenant House (Atlanta) and
Ministers Alliance of Charles County (Maryland).

As to the overall
focus of some these recipients, an affiliate of Sacred Heart
(Wilmington) notes that "Recognizing that in addition to meeting
economic and physical needs of the poor it is essential to foster
the spiritual growth of clients, staff and the community at large,
the Ministry of Caring began an evangelizing program in November
1997." In comparison to many of other CDBG earmarks, the ones
targeted to faith-based organizations often more closely fulfill
the program's legislative mandate.

Still, CDBG and
similar programs simply waste too much money on pork barrel
spending. President Bush's proposal to consolidate these programs
and tighten their focus would go along way toward redirecting
resources to those people and communities in need.

Ronald D. Utt,
Ph.D., is Herbert and Joyce Morgan Senior Research Fellow in the
Thomas A. Roe Institute for Economic Policy Studies at The Heritage
Foundation.

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